MONEY MATTERS > More on Money Matters > MM 4
By Paul A. Pouliot
Parenting a child with special needs is filled with unique challenges and rewards. As with all parenting, your support and guidance are essential as your child grows. But for your special needs child, full independence may not be possible even in adulthood. For this reason, special needs children should be protected by a comprehensive plan that helps secure their future when their parents are no longer around to oversee their care.
If you believe establishing a will is sufficient security for your special needs child, you may be mistaken. A standard will that assigns assets could prevent your beneficiary from receiving government assistance that may be essential for the level of care he or she requires. Get the help you need to create an effective plan that takes your child’s specific circumstances into account. You will need the advice of a lawyer with expertise in special-needs trust law in your state, a financial advisor and someone familiar with your child’s condition and future care needs to help you develop a well-rounded plan that addresses the legal, financial and medical aspects of future care.
The most critical component of a plan for your child’s future welfare is the special needs or supplemental trust. Through Social Security and Medicaid, the government subsidizes certain services to help care for special needs individuals with demonstrated financial need, but there are strict eligibility requirements. A special needs trust allows you to circumvent income limitations imposed by the government, because money or property left in this kind of trust does not count toward the allowable limits. Why? Because you are not leaving your assets in your child’s control. Rather, the assets are assigned to a trust that is managed by a trustee, who in turn nominates your child as beneficiary while maintaining absolute discretion regarding expenditures from the trust. The trustee can use the assets to pay for necessary services not funded by other sources. Assets can also be used to fund activities that enhance quality of life, for example, to pay for a haircut, a night at the movies or even a vacation.
The trustee you assign to a special needs trust should be a person who is not only trustworthy but also competent to manage finances and follow complex and ever-changing government guidelines. It’s a big responsibility, which is why some parents turn to a financial or nonprofit institution that specializes in trusts to serve as the child’s trustee.
In addition to helping provide supplementary income permissible by government benefit programs — and that can make life more comfortable and enjoyable for your child — a special needs trust also provides other protections. Specifically, it protects your child’s trust assets against creditors if there are outstanding family or individual debts. Within the trust, you can name successor trustees and define end-of-life care.
Take time now to gather a team of experts and create a special needs trust to ensure the future care of your special needs child. With the proper plan in place, you can be reassured your child will receive the appropriate level of care according to your wishes, even in your absence.
Paul A. Pouliot CFP®, CHFC®, CASL®, Senior Financial Advisor, An Ameriprise Platinum Financial ServicesSM practice – Ameriprise Financial Services, Inc. 116 South River Road | Bedford, NH 03110 – Office: 603.296.0030 | Fax: 603.296.0028 / firstname.lastname@example.org, www.ameripriseadvisors.com/paul.a.pouliot
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